•••For transforming FBN Holdings, Geregu Power to beacons of posterity
From his dramatic emergence as the Chairman of FBN Holdings Plc to reforms which translated into exciting returns for the investors in 2024, Femi Otedola was a toast of the investing public in 2024. With Geregu Power Plc, which he listed in 2023, sustaining its bullish run, Otedola’s positive impact on FBN Holdings consolidated his profile as a turnaround entrepreneur. Analysts said no other Nigerian investors came close to the billionaire investor in meriting the award of the Investor of the Year for 2024. Taofik Salako writes
It is that period of the year when investors count their gains and losses for the previous year. It is also that period of the year when boardroom maestros are celebrated for turning shareholders’ risks into rewards with dazzling precision. For investors in FBN Holdings Plc and Geregu Power Plc, 2024 was a year of superlative returns.
Despite macroeconomic headwinds such as naira devaluation, inadequate energy supply and inflationary pressure, Nigerian stock market showed considerable resilience with a full-year return of 37.65 per cent, one of the three highest returns across the global markets.
Average returns at the Nigerian market surpassed return in advanced markets by more than 15 percentage points and more than quadrupled average returns across frontier and emerging markets. Advanced markets of Americas and Europe recorded average return of some 21 per cent while frontier and emerging markets posted average gain of about six per cent and eight per cent respectively.
With net return of N15.41 trillion during the year, the stock market performance underlined equities as hedging securities, with inflation rate at 34.60 per cent and benchmark interest rate at 27.50 per cent.
While there was notable increase in inflows of foreign portfolio investments (FPIs), the Nigerian market performance was driven largely by sustained demand from domestic investors.
FBN Holdco and Geregu Power were toasts of the investors in 2024, growing in leaps and bounds and helping to drive the market to global recognition. The boards of FBN Holdings Plc and Geregu Power Plc led by the serial investor and multi-billionaire, Femi Otedola shone like stars.
Otedola’s financial acumen in 2024 can only be described as a Midas touch that transformed FBN Holdings and Geregu Power into glittering beacons of prosperity. With a deft hand and visionary insight, Otedola infused First Bank with renewed vitality, becoming its largest single shareholder and steering the first generation banking group towards unparalleled financial growth. His strategic manoeuvres not only bolstered confidence in Nigeria’s banking sector but also delivered bountiful returns to investors, turning risks into rewards with dazzling precision.
Otedola’s turnaround effect is not new to the investing public. The billionaire investor had in May 2007 bought and turned around the moribund African Petroleum (AP), which he rechristened Forte Oil.
He turned the company into a flourishing one that became a brand to beat in the sector before he sold his interest.
It was that Midas touch he brought to FBN Holding and Geregu Power, turning them into irresistible investment options for discerning investors.
That FBN Holdings (FBNH), whose flagship subsidiary First Bank came close to bankruptcy in 2016 as its bad loan charges surged 90 per cent to N226 billion before the CBN came to its rescue, could charm a deep-pocketed and astute investor like Otedola into investing several billions of naira in it remains a mystery. However, analysts said the development showed that Otedola was capable of seeing the opportunity which many others couldn’t see.
FBNH’s rise to become the most capitalised stock likely didn’t come as a surprise to stock market investors familiar with the significant impact Femi Otedola’s involvement can have on a company’s fortunes. Otedola is renowned as a pivotal investor in the stock market, evidenced by the remarkable performance of stocks under his ownership.
Taking charge in FBN Holding
FBN Holdings on January 31, 2024, notified the Nigeria Exchange (NGX) and the investing public of the appointment of Otedola as the new Chairman of the Board of Directors.
Since his appointment, the stock price and corporate earnings of the Group have witnessed significant transformation.
On the day he was appointed, the stock price of the oldest financial institution in Nigeria gained 9.91 per cent or N2.15 per share to close at N23.85 per share from N21.70 per share the stock opened for trading.
Also, his appointment in 2024 triggered a bidding war for the stock. Between January 31, 2024, to December 27, 2024, FBN Holdings stock price till date has gained 29.5 per cent or N6.40 per share to close at N28.1 per share, and it has reached a 52-week high of N43.95 per share on the NGX.
As the chairman and majority shareholder of FBN Holdings, Otedola currently owns approximately 13.15 per cent of the company.
His stake increased following a recent acquisition of 534.09 million shares valued at N16.02 billion between September 23 and 25, 2024.
This further cemented his position as the largest shareholder in FBN Holdings, a significant player in Nigeria’s banking sector.
When he was a Non-Executive Director of the company in 2023, he owned 40.034 million shares and 1.99 billion shares respectively in direct and indirect holdings in the group.
By the third quarter ended September 30, 2024, FBN Holdings announced N610.86 billion profit before tax, up by 128 per cent from N267.88 billion reported in comparable period of 2023.
Like FBN Holdings, like Geregu Power
Otedola also owns about 90 per cent stake in Geregu Power Plc, the first power generation company to be listed on the stock market. Listed on the main board of the Exchange, a total of 2.5 billion ordinary shares of Geregu were listed at N100 per share.
Shareholding analysis in December 2023 showed that Otedola’s direct and indirect shareholding in Geregu Power stood at 1,245 and 1.966 billion ordinary shares respectively. This represented majority stake of 78.64 per cent in the company through Amperion Power Distribution Company Limited.
The stock price of Geregu Power rose to N1,150 per share, a growth of 1,050 per cent from N100 per share it was listed on NGX. In 2024 alone, investors enjoyed a 188.2 per cent gain in stock price appreciation when its stock price opened at N399 per share to close on December 27, 2024, at N1,150 per share.
Since its listing, the company has demonstrated remarkable growth. By January 2024, Geregu Power’s market capitalisation exceeded N1 trillion, placing it among the elite group of stocks known as SWOOT (Stocks Worth Over One Trillion). Geregu Power’s market capitalisation as at December 27, 2024 stood at N2.88 trillion, ahead of most listed Tier-1 banks quoted on the Exchange.
Geregu Power, under the leadership of Otedola, delivered an outstanding financial performance in the first nine months of 2024. The company achieved a profit after tax of N24.1 billion, doubling the N11.4 billion recorded in same period of 2023. Revenue also surged by 102 per cent to N112.5 billion, supported by increases in both energy sales and capacity charges. Energy sales accounted for N71.4 billion, while capacity charges contributed N41.1 billion.
The company’s listing has been instrumental in attracting significant investor interest, thanks to its compliance with corporate governance standards and strong financial performance. Geregu’s strategic investments and operational efficiency have cemented its status as a leader in Nigeria’s energy sector.
Investor of the Year
Otedola, without a doubt, has created an image of a maverick investor in the Nigerian business environment. With significant and majority investments in energy-Geregu Power Plc and financial services- FBN Holdings Plc, he has continued to raise the bar and created a cult-like fellowship within the investing community, in what is popularly becoming ‘anywhere Femi goes, we go as investors’.
Several reasons endear Otedola to the investing community. First, there is no doubt that Femi Otedola’s transformative investments in First Bank and Geregu Power, delivering exceptional returns and driving national growth, make him Nigeria’s Investor of the Year 2024.
Analysts pointed out that Otedola wears the crown for his ability to sustain outstanding business performance across both sectors by consistently achieving high returns on investments and outperforming the market.
The sterling performances of First Bank Holding and Geregu Power, as analysed above, demonstrated Otedola’s deep market insights with a thorough understanding of market trends and the ability to anticipate market dynamics.
Otedola has also been able to maintain high ethical and leadership standards through strong corporate governance, risk management, corporate disclosures, strong business philosophy, and business compliance and assurance.
It is also to his credit that he has been able to demonstrate a knack for developing and implementing innovative strategies that set his businesses apart from others and of course, he was able to make impactful investments that yield not only financial returns but also have significant social and environmental impact.
Otedola is credited with massive transformation in the management and board of FBN Holdings, signalling a clear focus on repositioning the group for long-term growth and stability. In June 2024, the Otedola-led board had reshuffled the executive leadership of the flagship bank, confirming the appointment of Olusegun Alebiosu as Managing Director and Ini Ebong as Deputy Managing Director of First Bank of Nigeria (FBN). These appointments were part of a deliberate strategy to bolster the bank’s operational capabilities ahead of its ambitious repositioning plans.
In October last year, the momentum continued with the appointment of Wale Oyedeji as the new Group Managing Director of FBN Holdings. These changes culminated in what has been described as one of the most active years for board and management transitions at FBN Holdings and First Bank.
The FBN Holdings share price recorded above average return of about 18.5 per cent and was one of the better performers in 2024, compared to the rest of the FUGAZ. The group closed its N149.5 billion rights issue on December 30, 2024, as it aims to join the rest of the FUGAZ in meeting the recapitalisation target set by the apex bank.
Otedola’s influence on the overall market
The All Share Index (ASI)- the value-based common index that tracks all share prices at the NGX, closed 2024 at 102,926.40 points as against its opening index of 74,773.77 points for the year, an increase of 37.65 per cent or N15.41 trillion.
Aggregate market value of all quoted equities at the NGX also rose from the 2024’s opening value of N40.918 trillion to close the year at N62.763 trillion, an increase of N21.85 trillion or 53.39 per cent.
The difference between the ASI’s return and market value was due to unadjusted values from additional listings.
The ASI is generally regarded as the benchmark return for the stock market. It doubles as Nigeria’s sovereign index in the global markets.
The NGX attributed the overall market performance partly to positive influence of high-profile listings such as Geregu Power.
High-profile listings had energized trading activities on the exchange, providing investors with a broader range of blue-chip stocks. Notable entries included Geregu Power Plc, Transcorp Power Plc, Aradel Holdings, and BUA Foods. These listings have propelled the market capitalization from N12.79 trillion at the end of 2019 to N62.76 trillion as of December 2024, representing a meteoric increase of N49.97 trillion.
The 2024 performance marked the fifth consecutive year of positive return for the Nigerian market. It had closed 2023 as one of the three best-performing markets globally. Average return for Nigerian equities in 2023 stood at 45.90 per cent, equivalent to net capital gains of N12.81 trillion.
The market had broken its well-known previous cycle of decline in pre-election year to record its third consecutive positive performance in 2022, with full-year average return of 19.98 per cent, equivalent to net capital gain of N4.455 trillion.
It closed in 2021 with average return of 6.07 per cent, equivalent to net capital gains of N1.278 trillion. In the throes of the outbreak of COVID-19 pandemic in 2020, it had recorded average return of 50.03 per cent, representing net capital gains of N6.483 trillion.
ASI closed 2023 at 74,773.77 points as against its opening index of 51,251.06 points for the year. It had opened 2022 at 42,716.44 points.
Aggregate market value of all quoted equities had also risen from 2023’s opening value of N27.915 trillion to close the year at N40.918 trillion. It had recorded N22.297 trillion as opening value for 2022.
Group Managing Director, Nigerian Exchange Group (NGX Group) Plc, Mr. Temi Popoola, high-value companies contributed significantly to the resilience and impressive growth trajectory of the market.
“The strong performance of our blue-chip companies over the past decade has been a key driver of returns, even amid challenging economic cycles. Inflationary pressures have made equities an attractive hedge, and strategic new listings have significantly boosted market activity,” Popoola said.
He highlighted the transformative impact of policy reforms noting that macroeconomic shifts, particularly in the oil and gas sectors and currency devaluation, have been transformative.
“These changes, coupled with the liberalization of exchange rates, have enhanced operational efficiency and contributed to the robust performance of listed companies. As we approach 2025, we remain optimistic that continued reforms and a stable macroeconomic environment will sustain growth, boost liquidity, enhance investor confidence, and deliver long-term value for all market participants,” Popoola said.
